Update on Cryptoassets as of January 15, 2021 by, Van K. Tharp, PhD

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Market Summary

Last month the Bloomberg Galaxy Crypto Index was at 962.55, following a low of 217.82 in early March. BTC had made a new high at $23,899. Today, the index was at 1,414.37 while BTC has gone as high as $41,420. That’s a huge gain for one month.

The BTC halving took place on Monday, May 11, around 4 PM EST. That means that the BTC miners as a whole now produce 6.25 BTC every ten minutes, down from 12.50 BTC prior to the halving. It used to cost about $6,851 to mine a Bitcoin so when BTC was above that price, miners made a profit. It’s now estimated to cost between $12,000 and $14,000 to mine a single BTC. With the BTC price over $35K, miners should be doing very well but at the same time, more competition has entered the mining market so the BTC unit mining cost will increase since each miner earns less. My understanding is that the quick drop of about 25% from the $41K highs was due to miners selling a lot of their recently accumulated BTC.

Courtesy: https://www.bloomberg.com/quote/BGCI:IND

BGCI started at 1,000 around May of 2018 so even though BTC has been reaching all-time highs recently, other cryptos are just starting to wake up. ETH, for example, has not reached a new all-time high and it’s the backbone of the DeFi movement in cryptos (DeFi stands for Decentralized Finance. More on that below). That means we can start looking to the altcoins for the real future profit.

We exited half of our GBTC position recently because we expected the premium for GTBC to go down to perhaps zero in January. Accredited investors who put BTC into GBTC can now get out of their GBTC positions for the 1st time. That possibility offered the chance for a lot of selling of GBTC (bearish) but if the investors put their money into BTC, that would be bullish for BTC and neutral to bearish for GBTC. If the investors sold GBTC but did not reinvest in BTC, then that would be neutral for BTC and bearish for GBTC. So far, however, the GBTC premium has remained around 10-20% this month.

The table below tracks the price of five major cryptoassets across three generations of the technology now along with Bloomberg’s index:

  • Bitcoin, a 1st generation cryptoasset,
  • ETH and NEO, 2nd generation cryptos, and
  • Iota, a 3rd generation crypto
  • Holo (HOT) – I replaced Skycoin because it is pretty dead and there probably won’t ever be a market in it for US Investors.
  • BGCI Index – I’ve also started including BGCI prices in the table.

Date of the All-Time High Closes
*Dec 16, 2017 ** Jan 13, 2018 ***Jan 15, 2018 **** Dec 8, 2017 ***** May 29, 2019 # Jan 5, 2017

Look at the huge changes in a single month and you should have no doubt that the crypto bull market is starting to speed up.

The following table tracks the amount of money in stable coins in the top 100 or which have a market cap of over $100 million. The percentage of the total crypto market cap indicates one measure of health for the crypto market.

Since last month we had about a $2B gain in the market cap (over $100B now) of stablecoins.

* Bitcoin was as high as 90% of the market cap of all cryptos at the beginning of 2017 to as low as 32% at the top of the market. Part of the difference is that there are now nearly 2000 cryptocurrencies. So, the number keeps going up even though the market cap goes down.

** This was the peak of the crypto market in terms of market cap. Data via Tama Churchouse, Asia West Investor email on 4/11/18

& — Tether is not included in the top 5 as of Sep 20

Some interesting changes happened this month. CoinMarketCap.com listed 402 coins with a market cap of $25M. Seven months ago there were 133 coins with a market cap above $25 million. That shows the bull market in the other cryptos has started.

As I have mentioned previously, initial coin offerings were all the rage in 2017 until the SEC decided that cryptos were securities and ICOs were illegal. Now the new rage is Decentralized Finance and this group includes these new coins in the top 75: Wrapped BTC (WBTC), AAVE, UNI, DAI, YFI, COMP, SNX, UMA, CEL, LRC, and SUSHI. I’m sure some of these coins will become buzz words in the near future. SNX is up 192.8% over the last 30 days and LRC is up 138.87%, UNI is up 127.48%, and AAVE is up 127.48%. Remember, I mentioned how hot this area was last month before these gains.

I used to say that I only trusted those coins in the top 50-100, however, between Jun 2020 and the present, many coins fell out of the top 100. Some of them didn’t fall far but some of them fell out of the top 500.

We are now following 241 coins in our crypto model vs two months ago when we were following only 115 coins. We now include most of the top 200 cryptoassets in market cap. There are still some for which we cannot get price data – or at least good consistent data. I had been showing six months of market type for the top 115 coins but now that we are tracking almost double that, I started a new table –

We started our promotional GBTC offer for people joining the ST program in July when BTC was about $9,200. Now BTC is over $35K which created about a 400% gain. Many of the STs asked to have their credited money applied to the next phase of the ST program. We will be making a new offer in February to help you pay for the ST program. (By the way, in just 10 minutes, BTC can fluctuate by $400 so I’m just using a general price range when I started this update.)

This chart shows the 15 top and bottom cryptoassets. First, a word of caution. I am presenting the results from an Excel spreadsheet but I’m never quite sure about the data quality. Last month, BTC was #1, but this month after nearly doubling, BTC has a Market SQN of 1.00. A second spreadsheet showed BTC with a Market SQN® of 3.55 which would still keep it numbered as the top-scoring crypto.

We now have 78 cryptos with Market SQN® scores above 1.0 and 10 with a score over 2.0. Last month it was 40 and 6, respectively.

BTC was up 92.7% in 2019, 305.94% in 2020, and in the first two weeks of 2021, it’s up 26.32%. Let’s contrast that with the other hedge against the USD and disaster, gold. Gold was up 20.94% in 2019, up 18.32% in 2020, and it’s down 4.8% so far in 2021. The path of safety is now BTC.

Gold has about 10 times more market cap than cryptos right now (even though cryptos are now over a trillion for the 1st time). If all of the money in gold went into BTC, BTC’s price would be about $370,000.

The following table shows the BTC year change since January 2010 –

People talk about BTC being volatile and risky. But where can you find something that has made over 1,000% in 3 of the last 11 years, over 100% in 8 of them, and had only two losing years? There is only one other place than BTC with anywhere near equal performance – other cryptoassets.

If you had bought BTC at the beginning of 2012 (not at the very beginning), you would have turned $1,000 into more than $7.1 million (up $4.5M last month). Our Super Trader BTC system, which only has three losing trades has outperformed buy and hold. The system entered its last position on May 6th at $9,156.06 and it’s currently up 306% on the current position.

Binance’s coin, BNB, is said to be the most profitable coin (not in terms of price gains but in terms of value earned for the company producing it). It was up 174.22% in 2020 which comes after a 130.56% gain in 2019. So far in 2021, BNB is up 13.38%.

Ethereum, the number 2 market cap coin, didn’t rank in the top 15 two months ago but now it’s at #3 with a Market SQN® score of 2.62. It was down 3% in 2019 but it was up 471.44% in 2020 and this year, I’d expect it to do better than BTC since it is the backbone of the fast-growing DeFi movement. So far ETH is up 68.6% in the first two weeks of 2021. As one example of DeFi, Wrapped BTC is a new coin in the top 100 in Market cap. Wrapped is simply a BTC that’s been taken out of circulation and wrapped in an ERC20 contract so that people can earn interest on it through Decentralized Finance sites. In addition, a new format for ETH is coming out soon which should make it even stronger.

I believe there are three ways to rank the top cryptoassets:

1) I’ve already given you the top cryptos based upon the Market SQN scores.

2) The next way would be to list the top cryptos based upon the gains over the last 180 days. (There are some cryptos that might become this group, but we don’t have 180 days of good data for many).

3) The following table shows the top 10 cryptos in terms of percent gain over the last 30 days. There are two criteria for this list: 1) I have to own it as the ranking comes from cointracking.info and 2) I have to own over $100 worth of it. A lot of junk coins were deposited in my wallets over time as free coin drops but I’ve taken out some that I no longer like.

Remember these are 30-day percent gains. This is probably the easiest market possible to make a lot of money. You could, however, just as easily enter a position and immediately have a 25% drawdown – which could cause you to exit and then miss out on some nice gains. If you don’t have strong beliefs about cryptos like I do, crypto volatility will test you.

Finally, here are three charts for BTC from our Market SQN tracking spreadsheet. First, is the weekly price bar chart showing the strong bull market for the last half of 2020 –

 
 
Next, the Market SQN chart shows a very strong score even after the pullback in the last two weeks from recent highs–

 

Volatility has increased significantly since early November and has remained in the volatile range –

This newsletter is not designed to make recommendations but is a free service to the VTI community. I personally own positions in most of the cryptos mentioned in this newsletter, however, my primary positions and VTI’s primary positions are in GBTC (Grayscale Bitcoin trust) which we recommended for our Super Traders in July.

NEW OFFER FOR NEW SUPER TRADERS

We have a new offer coming up for people who want to join the Super Trader program. If you like, you can take advantage of this offer but wait as long as the end of 2021 to start the ST Foundation program.

The terms are still being finalized but here are our current thoughts –

1) Deposit between $10,000 and $20,000 for the ST Foundation program in February 2021. You don’t have to start the ST program until the end of 2021.

2) On the day you make your deposit, we will look at the value of VTI’s investment accounts. VTI accounts might include the VTI trading account which invests in GBTC and ETHE and a few stocks we like. It might also include a crypto account, but if that’s the case we have not yet opened a company crypto account. Six months later, we will look at the new value of the accounts and give you credit for any gains for your deposit less 40% for costs and taxes. Why 40%? Because we don’t know what Biden will do with corporate taxes in 2021, but we don’t want to charge you 21% when we might have to as much as the old 39% tax before Trump’s tax changes.

3) If you start the ST Foundation program immediately, any deposit will earn credit which will apply to the next phase of the ST program.

4) If you start the ST Foundation program later, you will have your initial deposit amount (plus gains) to apply to the program whenever you decide to start ST Foundation.

5) ST program deposits belong to the Van Tharp Institute. VTI will invest our funds but we will give you credit for 60% of any gains on your deposit over a six-month period. We will not take any individual sell requests from people who want to exit during the six-month holding period. During the six month holding period, VTI may buy, hold, or sell various positions. VTI will manage all positions but you receive credit for gains (less costs, taxes) while taking no risk because you will have credit for all the money you deposited for the ST program.

6) The holding period will only last for six months but you can wait until the end of 2021 to start the ST Foundation program. If the Super Trader program is part of your goal list, then you are likely to never get a better opportunity.

7) We may or may not start another similar program after the next six months depending upon market conditions and VTI’s status.

8) If you would like to start the ST program immediately, you will owe $10,000 now and $10,000 in six months. If you deposit $10,000 now, then that deposit amount plus gains (less costs, taxes) would be credited towards the second payment for ST Foundation in six months. Any “extra gains” over the amount of tuition due for ST Foundation would then be applied to ST Awakening. These credits can only be used for the program costs and will not apply to workshops or other products.

9) If you would like to start the ST program six months or more from now (through the end of 2021) you can deposit $10,000 – $20,000 now and use the deposit amount plus any gains to pay for ST Foundation tuition. Any “extra gains” over the amount of tuition due for ST Foundation would then be applied to ST Awakening.

We will provide more information on this new offer in the coming weeks.

Want more crypto news? CLICK HERE to watch a replay of Dr. Tharp’s free webinar (held on Monday, January 18th) for a discussion on current cryptocurrency trends and why cryptos still present an opportunity of a lifetime.

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